aetna inc (AET) Key Developments
Aetna Inc. Enters into Third Amendment to Five-Year Credit Agreement
Jul 31 15
On July 30, 2015, Aetna Inc. (Aetna) entered into a Third Amendment to the Five-Year Credit Agreement dated as of March 27, 2012 with the various lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. Pursuant to the Third Amendment, the lenders agreed to increase their aggregate commitments under the Existing Credit Agreement by $1.0 billion, to a maximum aggregate amount of revolving loans and letters of credit outstanding of $3.0 billion. The Third Amendment also modifies the calculation of total debt for the purposes of determining compliance prior to the Closing Date with certain covenants to exclude debt incurred by Aetna or its subsidiaries to finance its proposed acquisition of Humana Inc., the other financing transactions related to the Proposed Acquisition and/or the payment of fees and expenses incurred in connection therewith so long as either (A) the net proceeds of such debt are set aside to finance the Proposed Acquisition, the other financing transactions related to the Proposed Acquisition and/or the payment of fees and expenses incurred in connection therewith or (B) such debt is subject to mandatory redemption in the event that the merger agreement for the Proposed Acquisition is terminated or expires. The effectiveness of the increase in commitments under the Existing Credit Agreement is subject to various conditions precedent including: (i) the consummation of the Proposed Acquisition; (ii) the accuracy on and as of the Increase Effective Date of certain representations and warranties related to Aetna; (iii) termination of Humana's existing credit agreement dated as of July 9, 2013; and (iv) other customary conditions each as more fully described in the Third Amendment. On July 30, 2015, the company entered into a 364-day bridge credit agreement. Under the Bridge Credit Agreement, Citibank, N.A. (Citi) is the administrative agent. In addition to Citi, fourteen other lenders are party to the Bridge Credit Agreement. The maximum aggregate loan commitment of any single lender under the Bridge Credit Agreement is $2.6 billion. Citigroup Global Markets Inc., an affiliate of Citi, also is serving as financial advisor to Aetna in connection with the Proposed Acquisition. Under the Bridge Credit Agreement, Aetna may borrow on an unsecured basis an aggregate principal amount of up to $13.0 billion to the extent Aetna has not received $13.0 billion in net cash proceeds from issuing senior notes or from certain other transactions on or prior to the Closing Date. Any proceeds of the Bridge Credit Agreement are required to be used to fund the Proposed Acquisition and to pay fees and expenses incurred in connection therewith. Any borrowings under the Bridge Credit Agreement mature 364 days after the closing date of the Proposed Acquisition. Amounts outstanding under the Bridge Credit Agreement will bear interest, at Aetna's option, either (a) at the London Interbank Offered Rate (LIBOR); or (b) at the base rate (defined as the highest of (i) the prime rate, (ii) the federal funds effective rate plus 0.50% per annum and (iii) LIBOR for an interest period of one month plus 1.00% per annum), plus, in each case, the applicable LIBOR margin or base rate margin depending upon the ratings of the company's long-term senior unsecured indebtedness. The minimum and maximum LIBOR margins are 0.75% and 1.25% per annum, respectively, and the minimum and maximum base rate margins are 0% and 0.25% per annum, respectively, provided, however, that the applicable margins will increase by 0.25% per annum on the 90th day following the Closing Date and by an additional 0.25% per annum each 90th day thereafter while loans remain outstanding under the Bridge Credit Agreement. Aetna will also pay to each lender on each of the following dates a duration fee equal to the following applicable percentages of the aggregate principal amount of such lender's loans outstanding on such date: (i) 90 days after the Closing Date, 0.50%; (ii) 180 days after the Closing Date, 0.75%; and (iii) 270 days after the Closing Date, 1.00%. Aetna will also pay the lenders certain other fees. On July 30, 2015, the company entered into a three-year term loan credit agreement. Under the Term Loan Agreement, Citi is the administrative agent. In addition to Citi, sixteen other lenders are party to the Term Loan Agreement. The maximum aggregate loan commitment of any single lender under the Term Loan Agreement is $320 million. Under the Term Loan Agreement, Aetna may borrow on an unsecured basis an aggregate principal amount of $3.2 billion. Any proceeds of the Term Loan Agreement are required to be used to fund the Proposed Acquisition and to pay fees and expenses incurred in connection therewith. Any borrowings under the Term Loan Agreement mature three years after the Closing Date. Amounts outstanding under the Term Loan Agreement will bear interest, at Aetna's option, either (a) LIBOR; or (b) at the base rate (defined as the highest of (i) the prime rate, (ii) the federal funds effective rate plus 0.50% per annum and (iii) LIBOR for an interest period of one month plus 1.00% per annum), plus, in each case, the applicable LIBOR margin or base rate margin depending upon the ratings of Aetna's long-term senior unsecured indebtedness. The minimum and maximum LIBOR margins are 0.75% and 1.50% per annum, respectively, and the minimum and maximum base rate margins are 0% and 0.50% per annum, respectively. Aetna will also pay the lenders certain other fees.
North Shore-LIJ Health System and Aetna Sign Agreement to Provide Integrated Health Care to 30,000 New Yorkers
Jul 24 15
North Shore-LIJ Health System and Aetna announced a joint agreement that covers approximately 30,000 commercial members in a value-based collaboration designed to enhance patient care coordination, improve quality health outcomes and reduce healthcare costs. The agreement features a new payment model to reward North Shore-LIJ Premium providers for meeting quality and efficiency measures, including: the percentage of Aetna members who get recommended preventive care and screenings; better management of patients with chronic conditions such as heart failure; and appropriateness of antibiotic use. Under the agreement, care for Aetna members will be coordinated through North Shore-LIJ Premium IPA, an integrated network of over 5,500 primary care and specialty physicians as well as other healthcare professionals in the New York metropolitan area. Members can continue to use North Shore-LIJ's network of 19 hospitals, more than 400 outpatient practices and a full continuum of long-term care, rehabilitation, homecare, hospice and other services on Long Island, New York City and Westchester. North Shore-LIJ Care Solutions oversees the health system's care management strategy and operations, and coordinates clinical care for high-risk patients who are the intensive users of services. To address the complexity of delivering services across the continuum of care, North Shore-LIJ's information technology team developed innovative electronic care management software called Care Tool. Care Tool is used to support care coordination and outreach for complex, high-risk patients and helps patients meet their health and personal wellness goals.
Aetna Seeking Divestitures
Jul 6 15
Mark Bertolini, Chief Executive of Aetna Inc. (NYSE:AET) addressed antitrust concerns over acquisition of Humana Inc. (NYSE:HUM) and said that Aetna had already prepared for possible divestitures to address overlaps with Humana's business. "We took a conservative view of what we would need to divest," Bertolini said.
Aetna Inc., Humana Inc. - M&A Call
Jul 3 15
To consider definitive agreement under which Aetna will acquire all outstanding shares of Humana for a combination of cash and stock valued at $37 billion or approximately $230 per Humana share based on the closing price of Aetna common shares on July 2, 2015
Aetna Inc. Announces Management Changes
Jul 2 15
Sharon A. Virag will be appointed as Vice President, Controller and Chief Accounting Officer of Aetna Inc. effective July 3, 2015. Ms. Virag will succeed Rajan Parmeswar who, as previously announced, will be leaving Aetna effective July 3, 2015. Ms. Virag, age 49, is a certified public accountant and joined Aetna as Vice President, Corporate Finance on June 1, 2015. Prior to joining Aetna, Ms. Virag served as Vice President and Controller (Chief Accounting Officer) of The AES Corporation, a position she held since May 2013. Prior to AES, she was the Global Controller for the General Electric Oil & Gas Division and served as the Global Controller for GE Power & Water since 2010. Prior to joining GE, Ms. Virag held multiple posts, both domestic and international, at General Motors Company from 2008 to 2010, including Assistant Corporate Controller; Controller, GM Asia/Pacific; and Director of Internal Control and Sox Compliance.